Point Of View | Published March 8, 2017

What Google’s latest TV innovation means for marketers

Last week, Google announced the launch of its live TV and on-demand video streaming service, YouTube TV, which is anticipated to have a significant impact on the television advertising industry.

Predicted to launch in the next few months, YouTube TV will compete directly with other live TV streaming services (including DirecTV Now, Sling TV and PlayStation Vue), and indirectly with other streaming services that produce original content (including Netflix, Hulu, Amazon Video and HBO Now). A monthly subscription will cost $35 and will include the big four broadcast networks (ABC, CBS, NBC and Fox) as well as roughly 35 other cable networks (including ESPN, Disney Channel, Bravo, and Fox News). While YouTube TV’s initial network list lacks some of the bigger players like Comedy Central, Food Network and TNT, it’s likely that additional networks will be added through ongoing negotiations.

YouTube TV will launch with DVR capabilities that are superior to its competitors, offering a cloud-based DVR with unlimited storage. One other key differentiator for YouTube TV is its offering of live local broadcast channels, which aren’t currently offered nationwide by any streaming plans. These two features make the service more similar to standard broadcast TV and cable subscriptions, meeting a consumer demand largely unaddressed by competitors. With paid TV subscribers spending an average of $187 per month for their services, this offering may lead to more consumers “cutting the cord” to save on their monthly cable bills.

This announcement will only continue to drive product innovation to keep up with evolving consumer media usage behaviors. According to Simmons, more than 30% of adults ages 18 to 49 have watched video content online in the last 30 days, while 21% watched TV shows online via desktop, and 15% watched TV shows on a smartphone. Additionally, 42% of this audience subscribes to Netflix, and 30% have used it in the last week.

So, what does this major announcement mean for advertisers? YouTube TV will mean access to additional advertising inventory adjacent to high-quality programming such as live sports on ESPN or prime-time season premieres on the major broadcast networks. But it’s also likely that this will shift how advertisers buy television and video inventory.

Currently, TV networks sell most of their ad inventory, and allow other services like YouTube TV to sell a few minutes of ads per hour. However, Pacific Crest analyst Andy Hargreaves expects this dynamic to change, noting that, “Google’s vastly superior data should allow it to monetize its ad inventory at superior rates to networks.” Eventually, this could allow Google to manage ad sales, while networks would become just content suppliers.

We’re also seeing major shifts in advertising measurement to evolve with consumer behaviors and marketers’ needs. Nielsen, the leading TV audience measurement provider that’s responsible for determining programming ratings (which are in turn directly tied to advertising rates), has announced the rollout of its Total Content Ratings concept. This system will measure TV audiences across all devices and viewings, rather than just those viewing traditional programming as it airs on their TVs. This view of unduplicated video consumption across both linear and digital platforms will change how advertisers approach TV and online advertising, blending offline and online media strategies in a truly cross-device world.

OUR PULSE

With advertisers under constant pressure for their marketing dollars to make an ever-increasing impact on ROI, it’s imperative to keep up with innovations that allow for more targeted message delivery, which will ultimately reduce costs by minimizing waste. Because of this, Meers emphasizes the importance of research-based channel planning: knowing not only what media opportunities exist, but leveraging consumer data to determine which media channels and tactics are most likely to effectively deliver on a client’s objectives. TV is a powerful medium, and Meers is well positioned to determine how (or if) it best fits within a marketing campaign, whether that means linear, streaming video, programmatic – or whatever the next evolution may be.